On Friday U.S. West Texas Intermediate (WTI) and international-benchmark Brent crude oil futures are trading lower for a second session since hitting a multi-month high just two days ago.
Bullish traders are lightening up on the long side after OPEC again lowered its demand forecast and the International Energy Agency (IEA) said the market was still over-supplied. At 12:52 GMT, April WTI crude oil is trading $57.78, down $0.36 or -0.62% and April Brent crude oil is at $60.84, down $0.30 or -0.49%.
World oil demand in 2021 will rebound more slowly than previously thought, OPEC said on Thursday, adding to a series of downgrades as the impact of the pandemic lingers, Reuters reported. Demand will rise by 5.79 million barrels per day (bpd) this year to 96.05 million bpd, the Organization of the Petroleum Exporting Countries said in a monthly report, trimming its growth forecast by 110,000 bpd from a month ago.
“While the global economy is showing signs of a healthy recovery in 2021, oil demand is currently lagging, but is forecast to pick up in the second half of 2021,” OPEC said in the report. “The global vaccination rollout is gaining pace, infection rates are falling in some areas, improvements in treatment and the growing use of rapid testing facilities all lend support to an acceleration of economic activity after the first quarter,” OPEC said.
“Supply from the U.S. is challenged by short-term uncertainties around COVID-19 (and) continued capital expenditure discipline leading to lower upstream capital spending by U.S. oil companies,” OPEC said. The global supply and demand of crude oil are on course to continue rebalancing this year, after the turmoil brought by the pandemic in 2020, the International Energy Agency (IEA) said Thursday.
Despite increasing its estimates for the world’s oil output in 2021, the IEA said in its closely-watched monthly market report that a recovery in demand will outstrip rising production in the second half of the year to prompt “a rapid stock draw” of the glut of crude built up since the outbreak of the coronavirus.
At the same time, the IEA trimmed its forecast for global oil demand by 200,000 barrels a day to 96.4 million barrels – around 3% less than in 2019, before the coronavirus pandemic—although added that part change came thanks to a change to historic data.